Monday, October 17, 2016

Social security: bankrupt yes, but later than expected – Vision

The last paragraph of the Report of the Financial Sustainability of Social Security, which accompanies the State Budget for 2017, it is daredevil for those who are in active age and cash in the hope of having a retirement.

the document Says: "Even if the design balances the negative of the welfare system in the mid-2020s, being at that time simulated the annual use of the FEFSS (Financial Stabilisation Fund Social Security) to address these deficits, the exhaustion of the FEFSS is projected to the beginning of the decade of 2040". To put it another way: in roughly 25 years, the system enters in collapse.

Where is the good news? Less than a year ago, the Budget for 2016 was bankrupt sometime in the beginning of the decade of 30. Our Social Security (SS) won, so, 10 years of life, say the experts. And you can earn more, depending on the policy options.

Currently, the Stabilization Fund has about 14.1 billion euros, enough to pay for more than a year pension, in the case of the collapse of Social Security. The FEFSS is a kind of reservation that is used to cover any deficits that the system might have.

As are provided for deficits from the mid-20s, the FEFSS will arrive in 2040 with 6.5 billion euros. Taking into account the increase in the elderly population and, consequently, of the amounts spent on pensions (which should arrive at a 20.5 billion, or 8% of GDP), the Fund will only be able to ensure, by that date, about four months pension (or a third of its value).

Still, the minister of Labour and Social Security, Vieira da Silva, proved to be optimistic in the presentation, this Monday, October 17, the Social Security Budget. "The welfare system is on a trajectory correction of its imbalances, or improvement of its financial situation, as the revenue growth is higher than the growth of expenditure provided," he said.

The hope in the growth of employment (OE to 2017 foresees the creation of 50 thousand new jobs) is the main factor, allowing, on the one hand, to increase the revenues of the Social Security contributions and, on the other, to reduce expenses with unemployment benefits.

Another factor is the creation of an additional fee to IMI (Municipal Property Tax), which will reach real estate asset value higher than €600 thousand. The predicted revenue, from €170 thousand in 2017, is committed to the Stabilization Fund.

At the press conference, the minister Vieira da Silva took the opportunity also to clarify a couple of points of increase of 10 euros, scheduled for August, in pensions located between the monthly values of €275 and €628.

Although the Government has excluded from this increase in minimum pensions, social and rural areas, claiming that these were always updated, even in the years stronger from the crisis, some boarding houses of very low value may be after all included in the increase of €10. In the case of certain disability pensions and early retirement of very low value that were not updated by the previous Government. There will be about 250 thousand, it is estimated the secretary of State for Social Security, Claudia Joachim.

on the other hand, pensioners with more than one pension, the total of which exceeds €628, are not covered by the extraordinary increase in August.